J Bus Ethics (2013) 117:477492

DOI 10.1007/s10551-012-1529-6

Are Investors Willing to Sacrifice Cash for Morality?

R. H. Berry F. Yeung

Received: 1 September 2010 / Accepted: 18 October 2012 / Published online: 3 November 2012
Springer Science+Business Media Dordrecht 2012

Abstract The paper uses questionnaire responses pro- vided by a sample of ethical investors to investigate willingness to sacrifice ethical considerations for financial reward. The paper examines the amount of financial reward
necessary to cause an ethical investor to accept a switch from good ethical performance to poor ethical performance. Conjoint analysis is used to allow quantification of the utilities derived from different combinations of ethical and
financial performance. Ethical investors are shown to vary in their willingness to sacrifice ethical for financial
performance, and hence to display more heterogeneity than the all-encompassing ethical label implies. Because of the
existence of sub-groups of ethical investors with different attitudes towards financial reward, an attempt has been made
to associate observable investors characteristics with their level of willingness to trade-off morality for cash. One subgroup of investors in particular appears highly resistant to the idea of accepting higher financial return as compensation
for poor ethical performance. This unwill- ingness casts doubt on Jensen and Mecklings widely reported claim that
trade-off behaviour is ubiquitous in all areas of life.
Keywords

Ethical investment

Willingness to sacrifice ethical performance Conjoint analysis Utility analysis REMM

R. H. Berry (&)
Nottingham University Business School, Nottingham, UK
e-mail: robert.berry@nottingham.ac.uk
F. Yeung
Hull University Business School, North Humberside, UK
e-mail: f.yeung@hull.ac.uk

Abbreviations
SRI
Socially responsible investment
REMM
Resourceful, evaluative, maximising model
LFGj
A dummy variable indicating presence (1) or absence (0) of the characteristic large financial gain in
investment opportunity j
MFGj
A dummy variable indicating presence (1) or absence (0) of the characteristic moderate financial gain in
investment opportunity j
SFGj
A dummy variable indicating presence (1) or absence (0) of the characteristic small financial gain in
investment opportunity j
SFLj
A dummy variable indicating presence (1) or absence (0) of the characteristic small financial loss in
investment opportunity j
GEj
A dummy variable indicating presence (1) or absence (0) of the characteristic good ethical performance in
investment opportunity j
biK
The addition to the utility of individual i caused by the presence of a particular investment
characteristic (e.g. LFG)
bi0
The utility which individual i derives from the base case, investment of large financial loss (LFL) and

DIFF
OLD
PORT
OVER75K

poor ethical performance (PE)

The difference between the GE and LFG
coefficients for each individual investor
Age 55 or above
100 income over 75,000 per annum
Portfolio of 100,000 or more

Introduction
Decisions about which financial securities to hold and how much to invest are traditionally seen as driven by a

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